Hitachi, Mitsubishi sight losses, to cut more jobs

Eriko Amaha

TOKYO: Japanese electronics heavyweights Hitachi Ltd. and Mitsubishi Electric

Corp on Thursday forecast big losses for the current year and said they would

cut more jobs in the face of the info-tech sector's worst-ever downturn.

The announcements are the latest in a stream of bad tidings from Japan's

beleaguered chip sector, hit by a slump in spending on telecommunications

infrastructure and industrial equipment, especially in the sluggish domestic

market.

Hitachi now expects its group net loss for the full year through March to

swell to a record 480 billion yen ($3.58 billion), compared with an October

projection of a 230 billion yen loss.

In the previous year, Hitachi posted a profit of 104.38 billion yen.

Mitsubishi Electric, Japan's third-largest mobile handset maker, forecast a

group net loss of 70 billion yen for 2001/02.

That compares with the profit of two billion yen it forecast in October and

would be a sharp turnaround from its profit of 124.7 billion yen chalked up in

2000/01. It expects consolidated sales to dwindle to 3.57 trillion yen from an

October projection of 3.9 trillion yen.

All of Japan's big five chip makers -- Hitachi, Mitsubishi Electric, Toshiba

Corp, NEC Corp and Fujitsu Ltd. -- now expect to post operating losses for the

current business year. Etsuhiko Shoyama, Hitachi's president, played down

expectations for next year and said conditions would stay tough.

"It's best to assume that market conditions will get worse,"

Shoyama told reporters. "I think the next business year (2002/03) will be

severe."

Lehman Brothers Japan Inc analyst Satoru Oyama agreed, saying that chip

conglomerates would remain under pressure next year as their businesses largely

hinge on the stagnant domestic economy.

"I don't expect any of the five to post a net profit next year, although

they may eke out profits on an operating basis thanks to restructuring,"

Oyama said. "But there is no way they could make a V-shaped recovery."

The latest bleak estimates underscore the plight of Japan's top electronics

makers, which have been hit hard by falling demand as the world's second-biggest

economy struggles to crawl out of its third recession in a decade.

More jobs slashed



Hitachi, desperate to cut costs, said it would raise the number of its
planned global job cuts to 20,930 from 15,900 announced in October.

The staff reductions, to be made by the end of June, could help the company

save 110 billion yen in personnel costs in the next business year, it said.

Hitachi expects its operating loss to expand to 155 billion yen from an October

forecast of 30 billion yen.

It forecast group sales of 7.8 trillion yen, 100 billion less than previously

projected. Early retirement programmes, the consolidation of overseas and

domestic operations and declines in the value of its stockholdings are expected

to cost Hitachi 364 billion yen on a group basis this year.

Mitsubishi said it would cut 2,100 full-time group employees and slash the

number of contract workers in its chip division by 4,000. The job cuts are

expected to take place by March 31.

It said it would close its French mobile phone unit, located near Paris, by

December 2002, laying off 760 workers in all. Some 290 workers will move to a

new French marketing unit to be set up in January 2003. The stock market had

been expecting bad news after domestic media flagged a gloomier loss forecast

from both Mitsubishi and Hitachi.